I've been looking at the price correlation between REITs (NYSEARCA:VNQ) (NYSE:O) and 20yr treasuries (NASDAQ:TLT). Although short term rates remain close to zero due to FED policy, long term rates are moving up. I'm not sure there's a perfect correlation, but - at least in the short term - it does look like prices are moving in tandem.
I'm working under the assumption that - barring a catastrophic event - long term yield on the TLT will continue moving UP. Therefore, I'm not ready to buy REIT's at this particular time. If rates reach the 4.00% level (2011), and with a 2.50% premium over Realty Income , we'd be looking at a share price of $35. That's a lot of "if" and "when", but in my opinion it's just not worth the interest risk right now.